Over the past 60 years, the United States has consistently been the key contributor to world economic growth and welfare. In the 1940s, its leadership created the World Bank, the International Monetary Fund and the General Agreement on Tariffs and Trade – now the World Trade Organization. These three pillars reduce global poverty, support financial flows and set fair rules for all participants in international trade. In the 1970s, U.S. courage and conviction led the move from gold-related fixed exchange rates to floating ones. The shift allowed the money supply to grow and gave rise to world economic abundance.
The United States has continued to set an example for the world of how market-based actions consistently produce very efficient and effective results. For decades, the country has been the locomotive, absorbing growing foreign production within a large and wealthy domestic market. Of course there have been missteps – as one would expect to encounter with any pioneering efforts – but the U.S. approach has worked better than any others when it comes to economic improvement.
There is no reason to lose heart due to temporary setbacks. The United States continues to present new and special opportunities to the world. It offers the security and safety that have sadly been unattainable for most people on early. It presents a vision, flexibility and capability to adjust to new conditions which are envied around the globe.
The World Trade Organization (WTO) is the only international body dealing with the rules of trade between nations. At the core of the WTO are agreements, negotiated and signed by most of the world’s trading nations. These documents provide legal ground rules for international commerce. Their goal is to help the producers of goods and services, exporters, and importers conduct business in the global marketplace.
The WTO supplanted the General Agreement on Tariffs and Trade (GATT) in early 1995. The WTO has three main purposes: 1. To help trade flow as freely as possible as long as there are no undesirable side effects. In part, this means removing obstacles to trade. It also means making rules transparent and predictable so that individuals, companies, and governments know their scope of influence.
2. To serve as a forum for trade negotiations among the community of trading nations.
3. To settle trade disputes among member nations.
The GATT and now the WTO have made significant contributions to improved trade and investment flows around the world. Their successes have resulted in improvements in the economic well-being of nations around the world.
I have written before about the importance of free trade in economic development and recovery. Tariffs, quotas, and restrictions adversely effect the world economy. During this current economic crisis we are seeing a return to protectionism that endangers the economic recovery we need. Organizations like the WTO need to make sure that the global economy does not suffer from this new trend.